CA FINAL NOTES FOR SERVICE TAX (IDT)

CHAPTER 1: Preliminary Legal Provisions

1. SIM cards sold were not goods since it is integral to the service provided. The consideration would form part of value of taxable service

CHAPTER 2: Gamut and Coverage Of Taxable Services

2. A commission agent also acting as a consignment agent shall be covered under the definition of ‘clearing and forwarding agent’ by virtue of the inclusive part of the definition

3. The levy of service tax on hire purchase and leasing transactions falling under section 65(12) of the Finance Act, 1994 is constitutionally valid in accordance with the decision of the High Court in the case of Madras Hire Purchase Association

4. Software is goods as per Article 366(12) of the Constitution. Though software is goods, the transaction may not amount to sale in all cases and it may vary depending upon the terms of End User Licence Agreement (EULA). A software, whether customized or non-customised, would become goods provided it has the attributes thereof having regard to (a) utility (b) capable of being bought and sold (c) capable of transmitted, transferred, delivered, stored and possessed.

5. Service tax is not chargeable on the buffer subsidy provided by the Government for storage of free sale sugar under the category of `storage and warehousing services'. No one can provide services to own self. Further, subsidy was compensation on account of loss of interest, cost of insurance etc. incurred on account of maintenance of stock.

6. Assessee not liable to pay the service tax on the value of goods/material consumed as the photography was in the nature of works contract and it involved the elements of both sale and service

7. Turnkey contracts can be vivisected and discernible service elements involved therein can be segregated and classified as well as valued for levy of service tax provided such services are taxable services.

8. Though assessee was not providing any service in the Airport (service was provided by the Airport Authority), once the licence was given by the Airport Authority to the assessee to permit entry and allow enjoyment of the services provided there to the customers, assessee in fact became the service provider and was liable to pay service tax

CHAPTER 3: Service Tax Procedures

9. Option for composition scheme under works contract service cannot be exercised after payment of service tax on a particular works contract

10. Service tax is payable at the rate prevailing on the date of entering into service or at the rate prevailing at the time of billing and receipt of payment – Reliance Industries Ltd.

11. Deeming provision in rule 4(5) [Registration within 7 days] is applicable only in case of registrations granted by Superintendent. Centralised registration being of nature granted by Commissioner, the provision is not applicable. However, registration cannot be indefinitely delayed.